David Mason: Building Trust: Social Ties and Group-based Microcredit Lending in Nicaragua

David Mason completed his Ph.D. in urban planning from UCLA's Luskin School of Public Affairs in 2011 with a dissertation examining social capital and microcredit repayment. He currently consults with the World Bank on land, housing, and urban service delivery issues in East Asia and in Mongolia in particular. He also has previous consulting and research experience on community based planning in Oaxaca, Mexico and Cochabamba, Bolivia. Mason also holds a master’s degree in urban planning from UC–Irvine and a B.S. in anthropology from Santa Clara University.


Group-based microcredit lending is purported to overcome a market failure that inhibits access to credit for small enterprise investment in poor communities. The successful function of these borrower groups rests on a number of assumptions about group behavior that draw heavily from literature on overcoming commons dilemmas, including the role of social capital and a community's capacity for collective action. [Mason's] talk examines two interrelated questions from original research with a nonprofit lender in Nicaragua: 1) the conditions under which borrower groups cooperate to successfully repay their loans with evidence from household survey data; and 2) what role loan officers have in influencing the composition, training, and function of these groups. [He finds] very limited support for the social capital explanations that are often advanced in the literature to answer the former question. [He also suggests] that loan officers' conflicting incentives make it difficult to retain borrowers and to impart the skills and experience that would likely make them more able to repay.

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